Should you represent a party in the cannabis industry?
With the fairly recent laws in Illinois allowing the legal sale of cannabis for medical purposes, the issue of representing a cannabis business is going to be faced by a number of attorneys practicing in Illinois.
Here are three things you should know before a party in the cannabis industry comes knocking on your door.
1. Cannabis is an illegal enterprise under federal law.
Notwithstanding the fact that Illinois law has made it legal, under federal law, the sale of cannabis is a violation of statute. You’re going to have to decide whether or not you want to represent what is still illegal in the eyes of the feds.
2. There is still question about whether or not your license would be at risk.
The discrepancy between federal and state law raises numerous questions including whether or not your license or practice is at risk by assisting a potential client in violation of federal law. This issue has not been resolved by the Illinois Supreme Court which has the final say in licensing and ARDC issues.
3. Most banking institutions will not deal with cannabis enterprises.
Banks are reluctant to do business with pot sale businesses because of the violation of federal law. Without a prominent banking relationship, most of these cannabis businesses cannot process or accept credit card transactions. This results in a cash industry, which can be insecure and dangerous. For example, businesses are forced to rely upon security couriers (i.e. Brink’s trucks) to handle their cash transactions, which increases the risk of theft and other mischief by criminals.
As an attorney, you may be asked to give advice to a cannabis business regarding incorporation, bylaws, shareholders, stock certificates, or partnership agreements.
Although the standard legal approach to any business would be applicable, because of the complications listed above, one should step very carefully before jumping into the pool, or rather pot, of a cannabis business.